Power Finance Corporation Ltd

Dear Shareholders,

On behalf of the Board of Directors, it is my privilege to present the 38^th Annual Report of your Company for the Financial Year ended March 31, 2024, along with the Audited Standalone and Consolidated Financial Statements and Auditor's

Report thereon.

The year 2023-24 was excellent for your Company as it demonstrated remarkable resilience to achieve significant milestones in operational and financial performance. Your

Company has played an important part in accelerating the progress of the Indian economy, which was amongst the fastest growing economies in 2023-24. The performance highlights of your Company for the financial year 2023-24 are briefly mentioned here to give an overview of accomplishments on all fronts:

1. PFC'S DYNAMIC GROWTH AND FINANCIAL ROBUSTNESS: DRIVING FORCE FOR SUSTAINABLE FUTURE i. FINANCIAL EXCELLENCE (STANDALONE) - OPTIMISING SHAREHOLDER GAINS

• Highest Profit making NBFC in India in FY2023-24 with 24% increase registered in Profit After Tax from I11,605 crore in FY2022-23 to I14,367 crore in FY2023-24.

• Networth increased by 16% on account of increasing profits i.e.I79,203 crore as at March 31, 2024 vs. I68,202 crore as at March 31, 2023.

• The Board of Directors of the Company has recommended final dividend( I825.03 crore) @ 25% on the paid up equity share capital i.e. I2.50 /- per equity share of I10/- each for the FY2023-24, subject to the approval of the shareholders at the ensuing

Annual General Meeting. The Company had also paid interim dividend (I3,630.11 crore) of I11.00 /- per equity share of I 10 /- each during FY2023-24. Thus, the total dividend declared for the FY2023-24 is (I4455.14 crore) i.e. I13.50/- per equity share of I10 each.

• In September 2023, the Company issued bonus equity shares in the ratio of 1:4, i.e. 1 new equity share of I10/- each for every 4 equity shares and consequently issued 66,00,20,352 new equity shares of I10/- each.

• 36% year on year increase in 54EC bonds portfolio with 54EC bonds-a low-cost fund avenue available to PFC of

I8,994 crore as on March 31, 2024 vs. I6,600 crore as on March 31, 2023

• 14% double digit growth recorded in loan asset book with I4,81,462 crore as on March 31, 2024 vs. I4,22,498 crore as on March 31, 2023 and 49% increase in

42 disbursement, from I85,756 crore in FY2022-23 to I1,27,656 crore in FY2023-24

• Renewable loan asset portfolio crossed I60,000 crore with 25% year on year growth in renewable loan book with I60,208 crore as on March 31, 2024 vs. I48,198 crore as on March 31, 2023.

• Stressed asset book reduced by more than 45% in the last 5 years with I16,073 crore as on March 31, 2024 vs.

I29,540 crore as on March 31, 2019 i.e. decrease of 46% Net NPA Levels at 0.85% for FY2023-24.

• First Govt. NBFC to establish a foreign subsidiary ‘PFC Infra Finance IFSC Limited' in IFSC GIFT City. This subsidiary has been setup as a Finance Company in IFSC. A landmark milestone which will open avenues in international lending space for PFC.

• Conducive regulatory environment: 100% tax exemption for 10 consecutive years; no GST applicable on services; exemptions in provisions of Companies

Act, etc.

• IFSC entity will contribute to the growth of power and infrastructure sector by lending in foreign currency

• 37^th in Fortune 500 India'2023

• Highest ever PAT with an increase 25% i.e. I26,461 crore in FY2023-24 vs. I21,179 crore in FY2022-23.

• Growth of 16% in consolidated loan asset book.

I9,90,824 crore as on March 31, 2024 vs. I8,57,500 crore as on March 31, 2023.

• Increase of 20% in consolidated net worth (Including

Non-controlling interest) I1,34,289 crore as on March 31, 2024 vs. I1,11,981 crore as on March 31, 2023.

• The consolidated net NPA ratio at below 1%. The Net

NPA ratio of 0.85% in FY2023-24 vs. 1.03% in FY2022-23. Gross NPA ratio of 3.02% in FY2023-24 vs. 3.66% in FY2022-23.

• PFC Group is the nodal agency for implementation of LPS Rules and has been instrumental in reduction of legacy dues of DISCOMs by more than 70%.

• Total provision of I11,963 crore towards Stage- III Loan

Assets as at the end of FY2023-24 against I4,81,462 crore Total Gross Loan Assets. The Net Stage-III Assets stands at I4,110.70 crore as on March 31, 2024, which is 0.85% to the Total Gross Loan Assets.

• In addition to above, provision of I3,732.95 crore and

I175.83 crore on Stage-I Loan Assets and Stage-II Loan Assets respectively is available as on March 31, 2024.

• The details of resolution plans implemented during FY2023-24:

• First member from India to join Asia transition Finance

Study Group.

• Collaborated with Council on Energy, Environment and

Water (CEEW) to advance India's Net Zero Goal.

• Strategic tie up with Japan's New Energy and

Industrial Technology Development Organisation

(NEDO) to promote creation of environment friendly power supplies.

(I in crore)

*Attributable to owners of the Company (PFC)

In addition to above, provision of I3,732.95 crore and I175.83 crore on Stage-I Loan Assets and Stage-II Loan Assets respectively is available as on March 31, 2024.

Net Debt Equity Ratio 5.14 5.32 Operating Margin % 38.27% 35.70%

No significant Net Profit Margin% 31.21% 29.26% change CRAR% 25.41% 24.37% Return on Net Worth (%) 19.49% 18.20% iii. SANCTION / DISBURSEMENT (EXCLUDING RDSS/ IPDS/ R-APDRP)

During FY2023-24, your Company sanctioned loans to the tune of I2,82,269 crore, thereby registering an increase of 21% over the previous year's sanctioned amount of I2,31,625 crore. Loans disbursed during FY2023-24 were I1,27,656 crore, showing an increase of 48.86% over the previous year's disbursed amount of I85,756 crore.

The details of cumulative sector wise sanctions and disbursements are provided in below:

(I in crore)

4. AWARDS & RECOGNITION

1. PFC secured the 3^rd position in the "Swachhta Ranking" for offices in the NDMC area under Swachh Bharat Mission led by Hon'ble Prime Minister emphasising PFC's dedication to cleanliness and vision for a garbage free India.

2. PFC was conferred with the prestigious "Swachhta Pakhwada Award 2023" for its exemplary performance under Swachh Bharat Abhiyan.

3. PFC was ranked 2^nd among Central Public Sector Enterprises for procuring goods and services from

MSME Businesses in the I10 crore to I100 crore range in the FY2022-23. This achievement highlights

PFC's commitment to diversity and empowerment in procurement practices.

4. PFC secured SCOPE's Meritorious Award for "Best

Managed Financial Institution" in the Institutional Category-I (Maharatna/Navratna PSEs). The award was presented by Shri Jagdeep Dhankar, Hon'ble Vice President of India.

5. PFC won the prestigious "South Asian Federation of Accountants (SAFA) Gold Award in Best

Presented Accounts/Annual Report Awards (BPA) for the Financial Year 2021-22 in the ‘Public Sector Entities' category.

6. PFC was conferred with the prestigious Indian Chamber of Commerce Award in the category of "Operational Excellence" at the 12^th PSE excellence Awards.

7. PFC was selected as India's "Leading Infrastructure

Finance Company" at the BFSI & FinTech Summit 2024 by Dun & Bradstreet.

8. ‘Rajbhasha Kirti' Puruskar for Best performance in Official Language - PFC won the prestigious ‘Rajbhasha Kirti' third prize for the year 2022-23 in the category of Public Sector Undertakings in Region ‘A' for best performance in the implementation of Official Language Policy.

During the FY2023-24, an amount of I84,846.19 crore was mobilized through domestic market as per the details given below:-

(I in crore)

Further, for maintaining adequate liquidity, credit lines to the tune of I14,250 crore were sanctioned as on March 31, 2024 by various scheduled commercial banks to the Company for short-term funding generally without any commitment charges.

RBI has prescribed Liquidity Coverage Ratio (LCR) framework for NBFCs. These guidelines aims for maintenance of a liquidity buffer in terms of LCR by ensuring that NBFCs have sufficient High Quality Liquid

Asset (HQLA) to survive any acute liquidity stress scenario lasting for next 30 days. PFC maintains sufficient liquidity buffer in the form of HQLA as prescribed.

The foreign currency denominated borrowings during FY2023-24 are as follows:

(I in crore)

PFC established its Green Bond Framework in October, 2017 as approved by Climate Bonds Initiative (CBI),

London, UK. The Green Bond framework for funding renewable projects (viz. Solar and Wind) has been updated in August, 2021 to align with the latest set of guidelines namely Climate Bonds Standard version 3.0, the Green Bond Principles (GBP), 2021 issued by the

International Capital Markets Association (ICMA). In this context, an agreement was executed between PFC & Climate Bonds Initiative.

PFC has issued its first USD Green bond in December, 2017 and raised US $400 million (I2,575 crore) at a coupon of 3.75% and these bonds are listed on the London Stock

Exchange's new International Securities Market (ISM) and

Singapore Stock Exchange. Further, in September, 2021

PFC issued its first ever Euro Green Bonds amounting to EUR 300 million (I2,597 crore) at a coupon of 1.841% and these bonds are listed on the Singapore Stock Exchange, India INX and NSE IFSC. Annual update to the holders of the bonds, as required under the PFC's Green bond framework is as follows:-The funds raised under Green bonds have been utilised to finance renewable energy projects as per the "Eligible Projects" under PFC's Green Bond Framework. As at March 31, 2024, outstanding loan balances of Solar & Wind energy projects funded by PFC are I19,610 crore & I16,551 crore respectively. The total capacity of Solar & Wind energy projects funded by PFC and which are outstanding as on March 31, 2024 is 13,492 MW. Accordingly, PFC green bond portfolio is more than the amount raised through issue of green bonds.

Outstanding balance from multilateral/ bilateral agencies as at March 31, 2024 is as follows:

* Includes EUR 58,747,000.56 disbursed by KFW in FY2022-23 and EUR 17,763,829.26 in FY2023-24 under Discom Investment Facility

(ODA Loan- Without Govt. Guarantee).

6. CREDIT RATING

Your Company has been assigned the highest ratings by

Domestic Credit Rating Agencies and Sovereign Rating by

International Credit Rating Agencies as at March 31, 2024:

Your Company believes that these credit ratings enables us to develop strong relationship with our lenders and borrow funds at competitive rates.

7. MEMORANDUM OF UNDERSTANDING WITH GOVT. OF INDIA

Your Company has been consistently accorded ‘Excellent' Rating by Government of India since FY 1993-94 except for two financial years. For the FY2022-23, your Company was accorded ‘Excellent' rating. The rating for FY2023-24 is still awaited.

In FY2023-24, the achievement of your Company on some of the key MoU parameters (on standalone basis) has been: Revenue from Operations I46,022.46 crore, Loans Disbursed to Total Funds Available 99.98%, Overdue loans to Total Loans 0.05%, NPA to Total Loans 0.87%, and Cost of raising funds through Bonds as compared to similarly rated CPSEs (-)16.42 bps.

8. SUBSIDIARIES

REC is also a Systemically Important (Non-Deposit Accepting or Holding) Non-Banking Finance Company

(NBFC) registered with Reserve Bank of India (RBI) as an Infrastructure Finance Company (IFC). Its business activities involve financing projects in the complete power sector value chain, be it generation, transmission or distribution and also logistics and infrastructure sector. REC provides financial assistance to state electricity boards, state governments, central/state power utilities, independent power producers, rural electric cooperatives and private sector utilities.

During the FY2023-24, the total income of REC was I47,571 crore and the net profit was I14,145 crore on consolidated basis.

The detailed operational and financial performance of

REC is available on its website i.e. www.recindia.nic.in .

The following subsidiaries of REC as on March 31, 2024 are also subsidiaries of PFC: i. REC Power Development & Consultancy Ltd. ii. Chandil Transmission Limited iii. Dumka Transmission Limited iv. Koderma Transmission Limited v. Mandar Transmission Limited vi. Meerut Shamli Power Transmission Limited vii. Luhri Power Transmission Limited viii. Neres XVI Power Transmission Limited ix. Khavda II-D Transmission Limited x. Jalpura Khurja Power Transmission Limited xi. Kallam Transco Limited xii. Rajasthan Part I Power Transmission Limited xiii. Shongtong Power Transmission Limited profit earned is xiv. Khavda IV C Power Transmission Limited xv. Khavda IV-E2 Power Transmission Limited xvi. Khavda IV A Power Transmission Limited xvii. Khavda V-A Power Transmission Limited xviii. Rajasthan IV A Power Transmission Limited xix. Rajasthan IV C Power Transmission Limited xx. Rajasthan IV HI Power Transmission Limited xxi. Rajasthan IV E Power Transmission Limited xxii. Tumkur-II REZ Power Transmission Limited xxiii. NERGS-I Power Transmission Limited xxiv. Kankani Power Transmission Limited xxv. ERES-XXXIX Power Transmission Limited

Your Company had been offering consultancy support to the Power Sector through PFC Consulting Limited, its wholly-owned subsidiary. The Services offered by PFCCL are broadly in the following areas:

• Transaction Advisory: End-to-End solutions in Transaction Advisory Services across different areas in power sector (Selection of Sellers/Developers, Reform

& Restructuring, Independent Transmission Projects,

Privatisation of Electricity Distribution in Union

Territories, Resolution Plan and RE-Bundling).

• Project Development: Project Development & implementation of various GoI initiatives (Ultra Mega Power Projects, Lender's Independent Engineer, Lender's Insurance Advisor, Setting up of Manufacturing Zone for power and renewable energy equipment).

• PMA / PMC/ GoI Schemes: Project management & change agents focusing on revamped solutions & aiming for loss reduction (Revamped Distribution Sector Scheme,

Procurement of Power, DEEP Portal, Coal Linkage Auction under SHAKTI Scheme, Pilot Scheme, PRAAPTI

Portal, Integrated Power Development Scheme).

• Smart Solutions: Smart solutions to improve performance & processes, productivity & pro-active planning (Smart Metering, Energy Portfolio

Management).

• Policy Formulation Support: Support to Government/ Regulators for formulation of Policies, Regulatory framework and Guidelines & SBDs.

• Other Services: Strategy, Regulatory, Tariff Support, fund mobilisation and other aspects of power sector-.

Till date, consultancy services have been rendered by

PFCCL to its clients spread across India. The total no. of projects/assignments undertaken as on date are more than 200.

Further, during the FY2023-24, the total income of PFCCL is I267.07 crore and the net I158.67 crore. The net worth of PFCCL as on March 31, 2024 is

I239.49 crore.

Your Company is designated by Ministry of Power (MoP) as the ‘Nodal Agency' for facilitating development of Ultra

Mega Power Projects and its wholly-owned subsidiary i.e.

PFC Consulting Limited is the ‘Bid Process Coordinator' for

Independent Transmission Projects.

As on March 31, 2024, the subsidiaries of PFCCL incorporated as Special Purpose Vehicles (SPVs) are as follows:

1. Chhatarpur Transmission Limited

2. Siot Transmission Limited

3. Joda Barbil Transmission Limited

4. Ramakanali B -Panagarh Transmission Limited

5. Paradeep Transmission Limited

6. Gola B -Ramgarh B Transmission Limited

7. Khavda PS1 and 3 Transmission Limited

8. Pune- III Transmission Limited

9. Barmer I Transmission Limited

10. KPS III HVDC Transmission Limited

11. Sirohi Transmission Limited

12. Beawar - Mandsaur Transmission Limited 13. South Olpad Transmission Limited 14. Bhadla-III & Bikaner-III Transmission Limited 15. Jamnagar Transmission Limited 16. Bhuj II Transmission Limited 17. Angul Sundargarh Transmission Limited

PFC Infra Finance IFSC Limited was incorporated on February 11, 2024 as wholly-owned subsidiary of Power Finance Corporation Limited. Your Company is the first

Govt. NBFC which has established a subsidiary in the International Financial Services Centre (IFSC) at GIFT City, Gujarat. This subsidiary has been setup as a Finance

Company in IFSC. IFSC provides a unique platform to access global capital and expertise, which will enable your

Company to provide even more efficient and innovative financing solutions to the clients. PFC's entry into the IFSC shall open up new business opportunities and establish its global presence. This Company will focus on providing financial solutions for infrastructure projects across various sectors, including renewable energy. It will unlock avenues in international lending space and help in taking

PFC's brand global.

Coastal Karnataka Power Limited (CKPL), a wholly-owned company of PFC Ltd. was set up for developing the UMPPs in the State of Karnataka as per the mandate from GoI. Accordingly, CKPL's MoA was amended to enable Bidding in lenders' backed resolution plan by PFC and it has been renamed as PFC Projects Limited (PPL).

E. OTHER SUBSIDIARIES ESTABLISHED FOR DEVELOPMENT OF UMPP'S i. Coastal Tamil Nadu Power Limited ii. Orissa Integrated Power Limited iii. Sakhigopal Integrated Power Company Limited iv. Ghogarpalli Integrated Power Company Limited v. Deoghar Mega Power Limited vi. Cheyyur Infra Limited vii. Odisha Infrapower Limited viii. Deoghar Infra Limited ix. Bihar Infrapower Limited x. Bihar Mega Power Limited xi. Jharkhand Infrapower Limited

9. PROACTIVE RISK MANAGEMENT THROUGH A MULTI LAYERED RISK FRAMEWORK i. ASSET LIABILITY MANAGEMENT

Your Company has put in place a sound and robust Asset Liability Management Policy formulated in line with the RBI's guidelines to establish focus on liquidity and interest rate risk management process in PFC. Measurement and monitoring of Liquidity risk is done through cash flow approach; and for Interest rate risk, it is done through traditional gap analysis technique as detailed in RBI guidelines. Such analysis is made on periodical basis in various time buckets and is used for critical decisions regarding the time, volume and maturity profile of the borrowings and creation of mix of assets and liabilities in terms of time period (short, medium and long-term) and in terms of fixed and floating interest rates. The details of the asset liability management maturity pattern are given at Note No. 53.1 of the Notes to Accounts of the Standalone Financial statements forming part of this Annual Report.

Your Company has put in place "Policy for Management of Risks on Foreign Currency Borrowings" to manage risks associated with foreign currency borrowings. The

Company enters into hedging transactions to cover exchange rate and interest rate risk through various instruments like forwards, options and swaps. As on March 31, 2024, the total o/s foreign currency liabilities stand at USD eqv 8,736 mn, and the borrowings denominated in different currencies are USD 6,940 mn, JPY 2,09,309 mn & EUR 382 mn. Out of the total foreign currency borrowing portfolio 88% is hedged i.e. USD eqv 7,694 mn. Also, 93% of the FC portfolio with residual maturity up to 5 years is hedged.

Your Company has in place an IT Strategy Committee in compliance with the RBI Master Direction on Information

Technology Governance, Risk, Controls and Assurance

Practices for the NBFC sector, The Committee reviews the IT strategies in sync with the corporate strategy & Board policy, and monitors the IT risks, controls, cyber security arrangements and other matters related to IT

Governance ensuring an effective and robust system in place. In line with the RBI Master Direction for NBFCs, your

Company has implemented its IT policy and other policies on Change Management, Information Security, Business

Continuity Management and Cyber Security.

In order to manage risks faced by your Company, it has put in place an Integrated Enterprise Wide Risk Management

Policy (IRM policy). For implementation of the policy, your Company has constituted the Risk Management Committee. Under the IRM policy, the Company has to identify the principal risks which may have an impact on its profitability/revenues. In this regard, the Company has identified 11 significant risk parameters which arise from the Company's business model and from its use of financial instruments. These risk parameters cover the major operational risks, financial risks, market risks, regulatory risks etc. faced by the Company and are regularly assessed as per the Risk Assessment Criteria. Further, the Company also maintains a risk register which serves as repository of relevant information related to various risks.

The Company is involved in various GoI programmes for the power sector including acting as the Nodal Agency for operationalisation and implementation of Revamped Distribution Sector Scheme (RDSS) launched by Govt. of

India in July, 2021. PFC was also the designated nodal agency for operationalisation of IPDS and R-APDRP Schemes. Both of the Schemes have been Sunset in March, 2022.

MoP/ GoI vide OM dated 20.07.2021 has conveyed sanction of President of India for implementation of "Revamped Distribution Sector Scheme (RDSS) A Reforms-based and

Results-linked, Distribution Sector Scheme" to improve the operational efficiencies and financial sustainability of DISCOMs, by providing financial assistance to DISCOMs for upgradation of the Distribution Infrastructure and Prepaid

Smart Metering & System Metering based on meeting pre-qualifying criteria and achieving basic minimum benchmarks in reforms. PFC and REC (PFC's subsidiary) are the designated nodal agencies for operationalisation of the Scheme, as per RDSS guidelines and directions of inter-ministerial Monitoring Committee/MoP from time to time. Nodal agencies are eligible for 0.5% of the sum total of the Gross Budgetary Support (GBS) component of the various projects approved by Monitoring Committee as its fee. PFC is the nodal agency for 17 States/UTs under the Scheme. The implementation period of the Scheme is 5 Years (FY2021-22 to FY2025-26). The Scheme has an outlay of I3,03,758 crore with an estimated gross budgetary support of I97,631 crore from the GoI.

For States allocated to PFC, projects for loss reduction and metering have been sanctioned for 24 Distribution

Utilities across 13 States. Details as on March 31,2024 are tabulated below:

(I in crore)

^In addition, MoP has also disbursed I158 crore for other than the Project activities e.g. nodal agency fee (I 38 crore), training & capacity building etc.

• Overall facilitation and Programme management including appraisal of projects, quality monitoring, monitoring compliance of scheme guidelines, resolving queries of DISCOMs etc.

• Annual result evaluation framework of DISCOMs including monitoring of regulatory parameters e.g. subsidy accounting, Govt. dues, analysis of tariff orders, analysis of sales data etc.

• Capacity building/training programme for skills development of DISCOMs' employees.

• Co-ordinating with DISCOMs/ CEA/ MoP for State

Sector Distribution Projects covered under National

Infrastructure Pipeline (NIP)

• Sanction and monitoring of electrification of over

70,000 Particularly Vulnerable Tribal Groups (PVTG) households under PM JANMAN Programme being funded under RDSS.

• Facilitation with DISCOMs for Ease of Living (EoL) parameters; PM-KUSUM; Border area electrification; left-out household electrification; supply to BSNL

Telecom towers in remote areas etc.

• PFC is supporting the States by preparing Model

Bidding Documents for Automation and ERP projects under RDSS; monitoring of implementation of SCADA systems; development of Integrated web portal for various government Schemes including RDSS; tie-up with multi-lateral agencies viz. ADB, KfW for funding under RDSS and USAID, GiZ etc. for training & capacity building of DISCOM personnel

Various regulatory as well as corporate governance related reform measures being implemented in the

DISCOMs (inter alia including RDSS), have started showing desired results:

• Tariff orders are being issued regularly.

• Reduction in Average AT&C loss of distribution utilities in country from 22.3% in FY 21 to 15.4% in FY 23.

• For FY 22 and FY 23, there has been an improvement in the average revenue realisation by the DISCOMs.

• Quarterly accounts are now being submitted regularly.

• Timely payments of subsidy and Govt. department dues by State Governments have also contributed to increased revenue.

• Over 100% receipt of Subsidy by DISCOMs for the

2^nd consecutive year.

• Scheme also places strong emphasis on enhancing consumer satisfaction with improvement in service quality, leading to increased consumer trust and loyalty.

The erstwhile Scheme of IPDS (including R-APDRP subsumed) launched by Ministry of Power, Government of India in order to provide impetus to strengthening of power distribution sector, consumer/system metering,

IT enablement of distribution sector, Digital technology initiatives, new & innovative technologies etc. in urban areas were subsumed in RDSS Scheme. The Schemes have been Sunset in March, 2022.

• The Schemes have helped in making a difference in the lives of around 10 crore urban electricity consumers living in 3,600 towns across the country where the

Power Distribution infrastructure has been upgraded.

• IT and Technical interventions coupled with administrative and other measures undertaken under the Schemes have helped in improvement of Billing/Collection efficiency for reduction in Aggregate

Technical and Commercial (AT&C) losses.

• There has been an increase in transparency by way of capturing of data from ~36,000 urban feeders (11 kV) in IT enabled towns on Urban Distribution Monitoring System under National Power Portal.

• Real Time Data Acquisition System has been set up covering around 15,000 feeders for capturing data w.r.t. reliability indices at feeder level.

• 92 Gas Insulated Substations (GIS) & Hybrid PSS have been commissioned/upgraded. Such substations have been set up for the first time in Bihar, Karnataka, UP and NER States.

• Around 10 lakh Smart/Prepaid Meters have been installed in the country under IPDS.

• ‘1912' Short-code for ‘Complaints on Electricity' was made operational in all DISCOMs.

• Capacity building/training of Utility personnel has also been carried out using Digital means under IPDS/ R-APDRP to enhance their skill through workshops/ webinars on AT&C loss reduction, smart metering, project management, guidelines, best practices etc.

Thus, your Company is contributing towards improving operational efficiency and financial health of Power Distribution Sector of the Country.

Ministry of Power (MoP) vide Gazette Notification dated June 03, 2022, notified "The Electricity (Late Payment

Surcharge and Related Matters) Rules, 2022" (LPS Rules).

These rules provide a mechanism for settlement of outstanding dues of Generating Companies, Inter-State

Transmission Licensees and Electricity Trading Licensees.

Your Company has been designated by MoP as the Nodal Agency for implementation of LPS Rules, 2022. PFC shall be responsible for all the activities related to implementation of the said Rules including regular review and monitoring.

For operationalisation of Rules, PRAAPTI Portal

(developed and managed by PFC Consulting Ltd.) acts as an information portal wherein suppliers enter invoice details and Discoms update the corresponding payment information to ensure invoice and payment tracking of power bills in the country. Based on the information available on PRAAPTI, regulations are imposed on defaulting Discoms as per LPS Rules, 2022 by Grid Controller of India Limited.

With the implementation of Electricity (LPS and Related

Matters) Rules, 2022, remarkable improvement has been seen in recovery of outstanding dues of suppliers including

Generating Companies, Transmission Companies and

Traders. Against legacy dues of I1,39,947 crore as on June 3, 2022, 13 States/UTs have paid instalment of I1,00,724 crore (22 EMIs) up to May 2024 i.e. 72% of total legacy dues. Further, 20 States/UTs reported to have no outstanding dues as on June 03, 2022. Now the legacy dues

(overdues) have reduced from I1,39,947 crore to I39,223 crore and as on date there is no default in payment of instalments for legacy dues by States.

In view of provision of regulation under LPS Rules, 2022, the Distribution companies are paying their current dues in time. Since implementation of the rule, as on May 07,

2024, total bills amounting to I8,47,611 crore have been settled against total billed amount of I9,21,183 crore from

May 2022 (excluding EMI Payments against legacy dues and including Disputed Invoices).

MoP has initiated Tariff Based Competitive Bidding Process (TBCB) for development and strengthening of transmission system through private sector participation. Mop designated PFC Consulting Ltd. as Bid Process Coordinator (BPC) The objective is to develop transmission capacities in India and to bring in the potential investors after preliminary works like survey, route identification, etc.

As on March 31, 2024, 77 SPVs (69 are related to interstate transmission scheme and 8 are related to intra-state transmission scheme), 2 by your Company and other 75 by its wholly-owned subsidiary (PFC Consulting Ltd.) have been established for ITPs.

Further, during the FY23-24, following SPVs established for development of transmission projects has been transferred to the successful bidders selected through TBCB: i. Ananthpuram Kurnool Transmission Limited ii. Fatehgarh III Beawar Transmission Limited iii. Beawar Dausa Transmission Limited iv. Fatehgarh III Transmission Limited v. Bhadla III Transmission Limited vi. Fatehgarh IV Transmission Limited vii. Bikaner III Neemrana Transmission Limited viii. Bikaner III Neemrana II Transmission Limited ix. Neemrana II Kotputli Transmission Limited x. Neemrana II Bareilly Transmission Limited xi. Koppal II Gadag II Transmission Limited xii. Halvad Transmission Limited xiii. Vataman Transmission Limited xiv. Tirwa Transmission Limited xv. Jewar Transmission Limited xvi. Solapur Transmission Limited

As on March 31, 2024, out of 77 SPVs, 55 SPVs (50 are related to inter-state transmission scheme and 5 are related to intra-state transmission scheme) were transferred to the successful bidders. Further, due to de-notification of schemes by MoP, 5 SPVs were closed.

Development of Ultra Mega Power Projects (UMPPs), with a capacity of about 4,000 MW each, adopting super critical technology is the initiative of MoP, Government of India for which your Company has been designated as the ‘Nodal Agency' and Central Electricity Authority (CEA) as the Technical Partner by MoP.

PFC Consulting Limited (a wholly-owned subsidiary of

PFC) along with MoP and CEA undertake preliminary site investigation activities, land acquisition activities, site specific studies to obtain appropriate regulatory and other approvals for land, water, coal block, environment etc. necessary to conduct catalyst of the bidding process. The successful bidder is then expected to develop and implement these projects.

Your Company incorporated a total of 19 Special Purpose Vehicles (SPVs) as its wholly-owned subsidiaries for 14 UMPPs. Out of these, 4 UMPPs are awarded and 4 UMPPs are closed.

In reference to closed UMPPs, SPVs namely Tatiya Andhra

Mega Power Ltd. (2^nd Andhra UMPP), Coastal Maharashtra Mega Power Ltd. (Munge UMPP) and Chhattisgarh Surguja

Power Ltd. (Chhattisgarh UMPP) are striked-off from the records of RoC in FY22-23. Further, SPV namely Coastal Karnataka Power Ltd. (Karnataka UMPP) is being utilised by PFC for bidding reg. stressed projects (name of the SPV changed to PFC Projects Ltd.).

It was deliberated in MoP that UMPPs may be closed in view of the country making energy transition. Further, MoP directed PFC to take necessary action for closure of 6

UMPPs. Accordingly, PFC/PFCCL has initiated the process.

Ministry of Power has taken various reform initiatives, to bring about improvements in the Distribution Sector and has put in place an Integrated Rating Methodology for an objective evaluation of performance of Distribution Utilities. The objective of the Integrated Rating is to rate all utilities in the power distribution sector based on their financial performance and their ability to sustain the performance level. Private Distribution Utilities and

Power Departments are also being included to provide complete sectoral coverage.

The methodology adopted attempts to objectively adjudge the performance of distribution utilities against various parameters broadly classified under i) Financial Sustainability parameters ii) Performance Excellence parameters and iii) External Environment parameters.

For the introduction of Power Departments in the rating exercise, a subset of metrics with modified weightages from the overall methodology have been utilised for rating.

These ratings were carried out by the reputed consultant

M/s. McKinsey & Company and co-ordinated by your Company. These ratings are immensely beneficial as a diagnostic tool in the hands of the State Governments as well as Utilities to build on their strengths and work on areas requiring improvements so as to improve their operational efficiency and financial sustainability. Twelfth Integrated Ratings for FY2022-23, covering 72 Utilities/ departments across the country and inter se ranking of the Utilities was released by the Hon'ble Minister of Power,

New & Renewable Energy on March 11, 2024.

PFC publishes the Report on Performance of State

Power Utilities on an annual basis. The Report covers a range of key financial and operational parameters such as profitability, gap between average cost of supply and average revenue, net worth, receivables, payables, AT&C losses and consumption pattern of the sector at utility, state and national level. The report covers distribution utilities in all the States and UTs of India including major private distribution utilities and all State Gencos/ Transcos/

Trading utilities, offering a comprehensive insight into the performance of the Indian Power Sector.

The report for the period 2020-21 to 2022-23 with inputs received from the state power utilities up to April 2024 has been published.

For purposes of funding, your Company classifies

State Power Generation and Transmission entities into A++, A+, A, B and C categories. The categorisation (biannually) of State Power Generation and Transmission entities is arrived based on the evaluation of entity's performance against specific parameters covering operational & financial performance including regulatory environment, availability of audited accounts, etc. as per categorisation policy.

With respect to State Power Distribution entities (including

PDs/entities with integrated operations), your Company's categorisation policy provides for adoption of MoP's

Integrated Ratings by aligning such ratings/gradings with

PFC's standard categories of A+, A, B, C and D. The categorisation of Borrowers in the Logistics and Non-Power Infrastructure sector is carried out on the basis of recommendations of the Internal Committee considering the strengths and weaknesses of the project. The categorisation enables PFC to determine pricing of loans and stipulation of security to the state power entities

Power Exchange India Limited (PXIL) is India's first institutionally promoted Power Exchange that provides innovative and credible solutions to transform the Indian

Power Markets. PXIL, provides nation-wide, electronic exchange for trading of power and handles power trading and transmission clearance, simultaneously, it provides transparent, neutral and efficient electronic platform. PXIL offers various products such as Day Ahead, Day

Ahead Contingency, Any Day, Intra Day and Weekly

Contracts. PXIL provides trading platform for Renewable Energy Certificates. PFC's investment in equity shares of

PXIL as on March 31, 2024 is I3.22 crore. PFC's investment value as on March 31, 2024 is I4.78 crore.

Energy Efficiency Services Limited (EESL) was incorporated on December 10, 2009. EESL was jointly promoted by Power Grid, NTPC, REC and PFC with 25% equity stake each for implementation of Energy Efficiency projects in India and abroad. The shareholding of your Company

(along with its subsidiary REC) as on March 31, 2024 is 21.49%.

PTC India Limited (PTC) was jointly promoted by Power Grid, NTPC, NHPC and PFC. PFC has invested I12 crore in PTC which is 4.05% of PTC's total equity. PTC is the leading provider of power trading solutions in India, a Government of India initiated public-private partnership, whose primary focus is to develop a commercially vibrant power market in the country.

PFC has initially invested 26,05,42,051 equity shares of NHPC Limited at the rate of I21.78 per share (including securities transaction tax, brokerage and other charges) amounting to I567.46 crore in April 2016 during disinvestment by GoI through offer for sale route. PFC has sold 14,28,62,859 number of equities shares till March 31,

2024. As on March 31, 2024 PFC holds 11,76,79,192 shares of NHPC Limited valued at I1,055.58 crore. NHPC has reported profit after tax of I3,745 crore for the financial year 2023-24 as compared to Profit after Tax of I 3,834 crore for Financial year 2022-23.

PFC has invested 1,39,64,530 equity shares of Coal India Limited at the rate of I358.58pershare(includingsecurities transaction tax, brokerage and other charges) amounting to I500.74 crore in February 2015 through offer for sale route. As on March 31, 2023, PFC holds 1,39,64,530 equity shares of Coal India Limited valued at I606.20 crore. CIL has reported profit after tax of I15,766.83 crore for the financial year 2023-24 as compared to Profit after Tax of I14,802 crore for Financial year 2022-23.

During last 3 years, there has been no Presidential Directive.

The Right to Information is a fundamental right under the Constitution of India. The basic object of the Right to Information Act is to empower the citizens, promote transparency and accountability in the working of the Government, contain corruption, and make our democracy work for the people in real sense. It goes without saying that an informed citizen is better equipped to keep necessary vigil on the instruments of governance and make the government more accountable to the governed. The Act is a big step towards making the citizens informed about the activities of the Government. The information seekers, have, subject to few exceptions, an overriding right under the Act, to get information lying in the possession of the Public Authorities.

An elaborate mechanism has been set up in PFC to deal with requests received under the RTI Act, 2005. PFC has implemented the Right to Information Act, 2005 to provide information to the citizens of India and also to maintain accountability and transparency in the working of the Company. The Company has designated a Public Information Officer (PIO) and a First Appellate Authority (RTI) at its registered office for effective implementation of the RTI Act. The relevant information/disclosures are also made available on the official website( www.pfcindia. com) of the Company. During the period from April 01,

2023 to March 31, 2024, all 120 applications received under the RTI Act, were duly processed and replied to. PFC has also complied with the requirement of filing of online RTI Quarterly Returns on the portal of Central Information

Commission (CIC) during the said period.

Further, in order to strengthen compliance of the provisions of disclosures as contained in Section 4 of the RTI Act, 2005, Department of Personnel & Training (DoPT) vide its OM No. 1/6/2011-IR dated 15.04.2013 issued guidelines on the following :(i) Suo moto disclosure of more items under Section 4; (ii) Guidelines for digital publication of proactive disclosure under Section 4; (iii) Guidelines for certain clauses of Section 4(1)(b) to make disclosure more effective; (iv) Compliance mechanism for suo-moto disclosure

(proactive disclosure) under RTI Act, 2005.

In compliance of the aforesaid Guidelines, PFC has placed the requisite information on the website of the Company.

Besides the above, PFC is also linked with the online

RTI Portal of Govt. of India, Department of Personnel &

Training (https://rtionline.gov.in), which enables citizens of India, to file RTI applications/first appeals online along with payment gateway. Payment can be made through internet banking of SBI & its associate banks, debit/ credit cards of Master/ Visa and RuPay cards.

The aim of PFC's Corporate Social Responsibility and

Sustainability Policy (CSR and Sustainability Policy) is to ensure that the Corporation becomes a socially responsible corporate entity committed to improving the quality of life of the society at large by undertaking projects for Sustainable Development, mainly focusing on fulfillment of Power and Energy needs of the society.

PFC has implemented its CSR and Sustainability Policy with all its earnest and zeal. To oversee the activities of CSR, PFC has in place a Board level CSR&SD Committee of

Directors headed by an Independent Director.

PFC has implemented wide range of activities in the field of Environment Sustainability, Rehabilitation and

Reconstruction Activities, Healthcare, Education, Sports, Sanitation & Drinking water and Skill development &

Livelihood, Rural Development etc. Further, as per DPE's mandate, PFC has also been contributed to thematic areas i.e. ‘Health & Nutrition'.

The CSR Report under Companies (CSR Policy), Rules is annexed herewith.

Investing in employee capacity building is crucial for achieving our strategic objectives and maintaining a competitive edge. During FY2023-24, the focus on conducting customised programmes was maintained to ensure specific skill development aligned with the corporate goals.

The programmes on critical areas including Environmental,

Social and Governance (ESG), AML, KYC, CFT, General

Management Programmes, Stressed Asset Resolution under the Insolvency & Bankruptcy Code, 2016, Public Procurement through GeM Portal, Advanced Excel,

Conduct, Discipline & Appeal (CDA) Rules of PFC, etc. were organised along with other need-based programmes. In addition to the above, other compliance-related programmes such as Awareness Workshop on Sexual

Harassment of Women at Workplace (Prevention,

Prohibition & Redressal) Act, 2013, Occupational Health &

Safety Hazards, Office etiquettes were organised. All the fresh recruits of PFC attended a 3-week Foundation course of National Power Training Institute (NPTI) wherein they were trained on Basics of Power Sector, Renewables

& Solar Energy, Government Schemes, Energy Transition,

Energy Conservation & Energy Efficiency, SCADA, and

Project Appraisal among other topics. Employees are also encouraged to participate in Conferences related to energy and infrastructure sector, promoting continuous learning and exposure to the industry.

Your Company nominates senior executives in Leadership development programmes of premier management institutes like IIMs to equip them with skills to take on leadership roles.

During the year a total of 2484 man-days training were achieved through conducting various in- house programmes and sponsoring PFC employees to the programmesorganisedbyotherexternaltrainingagencies.

A dedicated employee engagement Portal viz. Portal for

Enhancing Engagement, Promote Awareness & Learning

(PEEPAL) has been created for all employees to increase Information/Knowledge sharing within the organisation and increase employee engagement and inclusiveness.

The Knowledge Sharing Platform initiative was commenced in the year 2023 with the aim of fostering a culture of continuous learning and collaboration within PFC. This initiative aims to develop employees' communication skills, subject matter expertise, facilitate cross-functional knowledge exchange and enhance overall organisational performance. The sessions conducted on this platform are readily available in form of presentations/recordings on the PEEPAL portal for wider dissemination of knowledge.

PFC is a founding member of Power Sports Control Board (PSCB). PFC employees participated with full vigour and enthusiasm in various Inter-CPSU sports tournaments like Badminton, Chess, Carrom, Table Tennis & Cricket organised by the PSCB member organisations during the

FY2023-24. PFC Men's team has won 1^st prize in Carrom tournament and PFC Women's team has won 3^rd prize in Table Tennis tournament.

PFC also celebrated its Foundation Day for its employees & their family member on July 16, 2023 at JLN Stadium,

New Delhi.

Your Company has put in place effective talent acquisition and retention practices, which are benchmarked with best corporate practices designed to meet the organisational needs. This apart from other strategic interventions leads to an effective management of Human Resources thereby ensuring high level of productivity.

The Industrial Relations within the Company have been very cordial and harmonious with the employees committing themselves entirely to the objectives of the

Company. There were no man-days lost during the year under review. Your Company recruited 57 executives in FY2023-24 and the attrition during the period from April 01, 2023 to March 31, 2024 was 0.75%.

Your Company is committed to strive towards adopting the best management practices of the industry and take up new initiatives for enhancing the productivity of employees.

An effective package of employee welfare measures which include comprehensive insurance, medical facilities and other amenities lead to a healthy and productive workforce. During the period, several employee related policies and facilities like TA rules, Promotion policy,

Service rule etc. were reviewed and revised.

The Company follows the Presidential Directives and guidelines issued by the Government of India to promote inclusive growth. The status is presented under: i. Status of Reservation of Posts for various categories (as on March 31, 2024)

PFC makes all efforts to ensure compliance of the Directives and Guidelines issued by the Government of India from time to time pertaining to the welfare of SC/ ST/ OBC/ ESM⁵/ PwBD⁶ employees. The steps taken include due reservations and relaxation as applicable under the various directives for direct recruitment as well as for promotions. Separate Liaison officers have been appointed to look into the matter of reservations. PFC has uploaded dashboard about the details of backlog of any reserved post on career page of PFC website. During the year there was no backlog reserved post.

* Grievance redressal cell as per the statutory requirements are in place in the corporation.

1Scheduled Caste 3Economically Weaker Section ⁵Persons with Benchmark Disabilities 2Scheduled Tribe 4Other Backward Classes ⁶Ex-Servicemen ii. Empowering diversity: Women's representation in workforce

Your Company has women in important and critical functional areas. Women representations have gone up across hierarchical levels. The Company provides equal growth opportunities for the women in line with Govt. of India philosophy on the subject. Women constitute 21.46% of the total work force.

PFC as part of its social responsibility makes all efforts to ensure compliance of the Directives and guidelines issued by the Government of India from time to time pertaining to the welfare of female employees.

Your Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Disclosures in relation to the Sexual Harassment ofWomen at Workplace (Prevention, Prohibition and Redressal) Act, 2013: a) Number of complaints filed during the financial year 2023-24-NIL b) Number of complaints disposed of during the financial year 2023-24-NIL c) Number of complaints pending as on end of the financial year 2023-24-NIL

The function of PFC's Vigilance Unit is to perform as an effective tool of the Corporation. During the Financial Year 2023-24, the Vigilance Unit has done preventive vigilance, by constantly emphasising on periodic & surprise inspections of various units. During the period, the Vigilance Unit has also issued instructions/operative guidelines to rationalise systems and procedures in order to eliminate gaps and confirming transparency in day to day operations. As a new initiative, the PFC has organised various outreach meetings for the vendors of the PFC, Regional office (South) and (West) and PFCCL to educate them about PIDPI, public procurement, latest trends in public procurement, integrity, ongoing changes etc. The vendors were sensitised about PIDPI by Vigilance Officials.

The Vigilance Unit carried out detailed investigation in respect of complaints registered during this period.

Power Finance Corporation Limited observed Vigilance

Awareness Week from 30.10.2023 to 05.11.2023. On the occasion, banners showing observance of the Vigilance

Awareness Week were displayed at the prime locations in and outside the office premises. Theme of Vigilance Awareness Week -2023 i.e. "Say no to Corruption; Commit to the Nation" was also displayed on desktops of all the employees of the corporation. Publicity of the event was also done through social media such as Facebook, Twitter (X) and Instagram. Vigilance Unit also provided link on intranet and PFC website for varied administration of e-pledge on Integrity.

During the week-long celebrations, the Vigilance Unit organised various competitions/events for employees such as Slogan writing competition, Poem Writing competition and Pictorial Competition on the subjects related to Vigilance. These competitions were open to all regular employees of this Corporation including those posted in the regional offices. The aim of these competitions was to stimulate the creativity, imagination and originality of the employees to enable them to come out with innovative ideas about dealing with Good

Governance. As a part of sequence of events being held during 3 months VAW-2023 campaign, a training programme on Conduct, Discipline and Appeal Rules, workshop on "Ethics and Governance" and talk session on the topic "Vigilance Awareness" and "Say no to Corruption; Commit to the Nation was organised for the employees of the Corporation. The talk session was taken by Shri P.

Daniel, Secretary, CVC, and Shri Pankaj Agarwal, Secretary

Power in presence of senior officials of the Corporation.

In addition to this, a workshop on PIDPI, Preventive Vigilance and PFC CDA Rules were organised by PFCCL for its employees on the subject of Preventive Vigilance.

Shri R.N. Nayak, Ex-Director, CVC has taken the sessions.

All the employees of PFCCL have actively participated in the event.

In compliance of the instructions of CVC, the sensitive posts in the Corporation have been identified and the concerned officers were rotated on a regular basis. Agreed lists and List of officers of Doubtful Integrity for the year 2024 were prepared in respect of corporate office at Delhi and regional offices at Mumbai and Chennai in consultation with the CBI. Prescribed periodical statistical returns were sent to CVC, CBI, MOP on time.

The Vigilance Unit continuously functioned for systemic improvements with a view to increase transparency, objectivity and accountability in the operations of the corporation. Thus, it has contributed towards strengthening in the functioning of the organisation.

PFC always gives utmost priority to Official Language Hindi in all its official working. It is a matter of great pride that PFC has been awarded the prestigious ‘Rajbhasha

Kirti Puraskaar' 3rd Prize for the year 2022-23 (in Public Sector Category in Region ‘A') by the Department of Official Language, Ministry of Home Affairs for its concerted efforts made towards implementation of Official Language Policy. The Prize has been received by PFC for consecutively 10^th time.

PFC celebrated Hindi Day on September 14, 2023 and

Hindi Month from September 14, 2023 to October 13, 2023 successfully. Six (6) competitions, viz. ‘Hindi Tippan evam Aalekhan', ‘Chitra Kuchh Bolte Hain', ‘Rajbhasha Niti, Niyam Pratiyogita', ‘Samanya Gyan Prashnottari Pratiyogita', Smaran Shakti Pratiyogita and ‘Special Competition for Senior Executives' were conducted during the Hindi Month to encourage and motivate employees to continue working in Hindi. During Hindi Month, a Kavi Sammelan along with employee's performances was also organised on October 10, 2023 for PFC employees at Kamani Auditorium.

During the year, Seven (7) Hindi workshops were organised on various topics in which 364 employees participated. A Rajbhasha Sammelan was organised at Puri, Odisha for the Executive Directors and HoUs of the Corporation from May 05, 2003 to May 07, 2023. A Hindi Seminar was also organised on October 09, 2023 on the subject

"Pracheen Bharat Aur Hindi" in which 55 employees participated. Apart from the competitions held during the Hindi month, Five (5) Hindi competitions, viz. ‘Shabd

Vyuh Bhedan Pratiyogita', ‘Mera Desh, Meri Bhasha, Meri Pahchan', ‘Shabd Manthan Pratiyogita', ‘Samanya Gyan Hindi Pratiyogita' and a special competition on the occasion of World Hindi Day on January 10, 2024 were also conducted during the year in order to promote the usage of Official Language in which 266 entries were received from the employees. Review meetings with various units, internal inspections and Personal contact programme were conducted for the purpose of reviewing the Rajbhasha related work being done by these units and employees. To motivate the employees towards

Hindi, the book "Kurukshetra" written by renowned poet and writer Ramdhari Singh Dinkar was distributed to all the employees.

The meeting of Hindi Advisory Committee, Ministry of

Power was held on August 17, 2023. The meeting was presided over by Shri R. K. Singh, Hon'ble Minister of

Power and New & Renewable Energy. During the meeting, the Corporation was honoured with "Rajbhasha Samman" for the year 2022-23 by the Hon'ble Power Minister for its significant contribution towards the implementation of the Official Language Policy and organising the meeting of

Hindi Advisory Committee.

Inspections were carried out by the Northern Regional

Implementation Office-1, (Delhi), Department of Official Language, Ministry of Home Affairs and the Ministry of Power on May 02, 2023 and May 18, 2023, respectively; regarding implementation of Official Language in the Corporation and they appreciated the efforts being made by PFC towards the same.

Four (4) issues of the house journal, "Urja Deepti", were published and uploaded on the PFC website as well as the website of the Department of Official Language, Ministry of Home Affairs. The house journal, "Urja Deepti", was awarded Second prize for "Shreshth Grih

Patrika" among the magazines/journals published by the member undertakings of NARAKAS (Upkram-1) Delhi during January to December 2023 in the meeting held by

NARAKAS (Upkram-1) on January 24, 2024.

All these efforts acted as motivational tools for creating possibilities of progressive use of Official Language in the Corporation.

As required under Section 134(5) of the Companies Act,

2013, it is confirmed (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period; (c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the Directors had prepared the annual accounts on a going concern basis; and (e) the Directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

(f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Prem Gupta & Company, Chartered Accountants and Chokshi & Chokshi LLP, Chartered Accountants were appointed as Joint Statutory Auditors of the Company for FY2023-24 by the Office of the Comptroller & Auditor General of India.

The Joint Statutory Auditors have audited the accounts of the Company for the FY2023-24 and have given their report without any qualification, reservation, adverse remark or disclaimer. The copy of the audit report is annexed herewith.

Your Company had engaged M/s. Mehta & Mehta, Company Secretaries as Secretarial Auditors for FY2023-24. Secretarial Audit Report is annexed herewith. The observations of the Secretarial Auditor and reply of the management on the observations, for the FY2023-24 along with copy of the audit report is annexed herewith.

The Comptroller and Auditor General of India (C&AG) has mentioned that on the basis of audit, nothing significant has come to their knowledge which would give rise to any comment upon or supplement to Statutory

Auditors' report. The copy of the report of C&AG is annexed herewith.

Pursuant to the Companies Act, 2013, the Companies are permitted to send documents like Notice of Annual

General Meeting, Annual Report etc. through electronic means to its members at their registered e-mail addresses. PFC, being a socially responsive Company actively supports the implementation of ‘Green Initiative' of the Ministry of Corporate Affairs (MCA). Your Company has effected electronic delivery of Notices and Annual

Reports to shareholders, whose email ids are registered.

Further, pursuant to Section 108 of the Companies Act, 2013 read with Rule 20 of the Companies (Management and Administration) Rules, 2014, the Company is providing e-voting facility to all members to enable them to cast their votes electronically in respect of resolutions set forth in Annual General Meeting (AGM). The Company will also be conducting the AGM this year through video conferencing/other audio-visual means. Members can refer to the detailed instructions for e-voting and electronic participation in the AGM, as provided in the

Notice of AGM.

22. STATUTORY DISCLOSURES i. Your Company is a non-deposit taking NBFC, and thus has not accepted any public deposits during the

FY2023-24. The Board of Directors of the Company has passed requisite resolution in this regard, in compliance of RBI Guidelines.

Further, Perpetual Debt Instruments (PDI) of

I100.00 crore was issued by your company during

FY2023-24. ii. No significant and material orders were passed by any regulator or court or tribunal impacting the going concern status and company's operations during the FY2023-24. iii. The Company maintains an adequate system of

Internal Control, including suitable monitoring procedures to ensure accurate and timely financial reporting of various transactions, efficiency of operations and compliance with statutory laws, regulations and Company procedures/policies. For details, please refer to the ‘Management Discussion and Analysis Report' annexed to this report. iv. Information on composition, terms of reference and number of meetings of the Board and its

Committees held during the year, Whistle-Blower Policy, remuneration to Whole time Directors, sitting fees to Independent Directors and details regarding IEPF and web-links for familiarisation programmes of Directors, Policy on Materiality of

Related Party Transactions and Dealing with Related

Party Transactions, Policy for determining Material

Subsidiaries, etc. have been provided in the ‘Report on Corporate Governance', prepared in compliance with the provisions of SEBI (LODR) Regulations, 2015 and DPE Guidelines on Corporate Governance, 2010, as amended from time to time, which forms part of this Annual Report. v. Pursuant to Section 186(11) of the Companies Act,

2013, loans made, guarantees given, securities provided or investment made by a company engaged in the business of financing of companies or of providing infrastructural facilities in the ordinary course of its business are not applicable to the Company, hence no disclosure is required to be made. Further, details of investments are appearing at note no. 11 of the Notes to Accounts of the standalone financial statements. vi. The provisions of Section 197 of the Companies

Act, 2013 and Rules made thereunder relating to managerial remuneration are not applicable to

Government companies, therefore no disclosure is required to be made. vii. The Company has not issued any stock options to the

Directors or any employee of the Company during the FY2023-24. viii. The Central Government has not prescribed the maintenance of cost records for the products/ services of the Company under the Companies

(Cost Records and Audit) Rules, 2014 read with the Companies (Cost Records and Audit) Amendment Rules, 2014 prescribed by the Central Government under Section 148 of the Companies Act, 2013.

Accordingly, cost accounts and records are not required to be maintained by the Company. ix. During the year under review, neither the statutory auditors nor the secretarial auditor has reported to the audit committee, under Section 143(12) of the Companies Act, 2013, any instances of fraud committed against PFC by its officers or employees. x. The Company is compliant with the applicable

Secretarial Standards issued by the Institute of Company Secretaries of India. xi. The Independent Directors of the Company are nominated/appointed by the President of India acting through the administrative ministry, i.e. MoP. Accordingly, the appointing authority considers the integrity, expertise and experience of the individual to be nominated/appointed. In the FY2023-24 no new Independent Directors were appointed on the

Board of PFC. xii. There are no significant particulars, relating to conservation of energy and technology absorption as your Company does not own any manufacturing facility. xiii. The Foreign exchange outgo for the FY2023-24 aggregated to I11,409.41 crore. The payments are majorly for the purpose of servicing principal and interest component of foreign currency borrowings. The Foreign exchange earnings for the FY2023-24 were nil. xiv. Total expenditure for the FY2023-24 amounted to I28,408.41 crore as against total expenditure of I25,495.01 crore in FY2022-23. Out of it, finance cost amounted to I28,013.78 crore in FY2023-24 as compared to I23,282.57 crore in FY2022-23. This constituted 98.61 % of total expenses in FY2023-24. During FY2023-24, employee benefit expenses and other expenses were I242.72 crore and I166.11 crore respectively against I219.01 crore and I128.55 crore respectively in the previous year. xv. M/s. ASA & Associates LLP, Chartered Accountants, appointed for testing adequacy and operative effectiveness of Internal financial control over financial reporting, has certified that the Company maintains an adequate system of internal financial controls, evaluates and makes an assessment of its adequacy and effectiveness in a satisfactory manner which takes care of requirements under Companies

Act, 2013. xvi. The Annual Return of PFC for FY2022-23 is available on the link The Annual Return of PFC for FY2022-23 is available on the link https://pfcindia.com/ensite/ DocumentRepository/ckfinder/files/Investors/ Annual_Return/Annual_Return_22_23.pdf and for FY2023-24 it shall be made available on your Company's website www.pfcindia.com. xvii. The details of Debenture trustees appointed by the Company for the different series of Bonds issued by your Company are annexed herewith. xviii. During the year no application has been made or any proceedings pending against PFC under the

Insolvency and Bankruptcy Code, 2016. Further, details of the difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the banks or financial institutions, are not applicable. xix. Procurement from Micro & Small Enterprises Government of India has notified Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 to support marketing of products produced and services rendered by them. In compliance to the policy, annual procurement plan including items to be procured from Micro & Small Enterprises (MSEs) are uploaded on PFC's website for the benefit of MSEs.

Government of India has notified Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 to support marketing of products produced and services rendered by them. In compliance to the policy, annual procurement plan including items to be procured from Micro & Small Enterprises (MSEs) are uploaded on PFC website for the benefit of MSEs. The benefits to MSEs like exemption from tender fees and earnest money deposit, purchase preference, interest on delayed payments and exemption from prior experience - prior turnover criteria subject to meeting of quality and technical specifications are also extended to encourage these enterprises.

During the financial year, your Company has procured products and services from MSEs, which constituted 69.82% of the total annual procurement value, against the mandate of 25% set by Ministry of Micro, Small and Medium Enterprises, Govt. of India. During the year, 338 MSEs were benefited out of which 21 MSEs belonged to SC/ST category and 67 MSEs were owned by women.

PFC is also registered on the Trade Receivables

Discounting System (TReDS) platform for financing of trade receivables of Micro, Small & Medium Enterprises (MSMEs). TReDS platform facilitates the discounting of invoices of MSMEs leading to prompt generation of working capital for their regular business operations.

Your Company had also organised/participated in 03 vendor development programmes in coordination with Ministry of Micro, Small and Medium Enterprises, Govt. of India to encourage participation of Micro and Small Enterprises.

23. INFORMATION TECHNOLOGY INITIATIVES PFC has embarked on several information technology initiatives aimed at gaining strategic advantage through encouraging creative and innovative utilisation of technology to accomplish the Corporation's goals. PFC advocates for responsible management of information access and delivers a secure, dependable technology framework alongside high-quality user services and support, with the aim of addressing the continuously evolving business requirements while ensuring the regulatory compliances.

The compliance guidelines issued by various statutory & regulatory bodies are being followed and implemented at PFC. As per the guidelines issued by RBI vide Master Directions to NBFCs, the IT Strategy & IT Steering committees have been constituted and regular meetings are conducted. IT policy has been implemented & IT audits are being carried out on annual basis.

PFC is committed to work towards aligning itself with the changing threat landscape and has initiated significant measures to enhance its cyber security. PFC has enhanced the following security services. a) PFC has implemented the SOAR (Security Orchestration, Automation & Response) system which covers the security for Servers, Endpoint systems, Managed Detection and Response solutions to protect PFC's IT infrastructure from

Security Threats and Vulnerabilities. b) Anti-APT Devices, Next Generation Firewall, IPv6 for increased cybersecurity posture.

PFC observes "Cyber Jagrukta Diwas" on the first Wednesday of every month to raise awareness about cyber security among its employees including casual staff. PFC is ensuring 24x7 real-time monitoring of its IT infrastructure to detect, alert and respond to avert cyber incidents, minimise service disruptions and maintain high availability of critical systems & services.

PFC has taken up initiatives for a complete digital transformation as per the laid down IT roadmap to adopt state-of-the-art technology which can ensure PFC to adopt the industry best practices & standards. As part of this, PFC is upgrading to a "Comprehensive Single Stack IT ERP platform" to ensure end-to-end integration and digitisation of the processes and services.

PFC remains steadfast in harnessing Information Technology to empower its employees in efficiently fulfilling business functions. Implementation of collaboration tools for online meetings, adoption of an e-Office solution for streamlined file processing, conducting paperless digital board meetings through BoardPac, and transitioning to paperless employee claims are among the initiatives undertaken by PFC to enhance organisational efficiency through technological utilisation.

PFC has provided a facility to its employees to work remotely with secure, remote access to the Company's internal resources, data & networks in order to attend work exigencies when not in office.

It is very crucial to safeguard the business operations of PFC in order to ensure business continuity. PFC has established a disaster recovery site on a private cloud to replicate the existing data centre setup in a different seismic zone. With this, PFC can continue its business operation during any disaster.

The bi-lingual PFC website is maintained with up-to-date information as per "Guidelines for Indian Government Websites". The face uplifted website provides more comprehensive information to meet the needs of external stakeholders.

MIS portal for Business intelligence and Decision Support

System are in place and enriched regularly with required metrics for fast and effective decisions.

Your Company has established stringent vigil mechanism by way of implementing various codes and policies like fair practices code, code of conduct, code for prevention of insider training, fraud prevention policy, policy on related party transactions, public procurement policy, whistle-blower policy, etc. The details are also posted on the Corporation's website.

PFC has a Grievance Redressal System for dealing with grievances of the public at large. The status of the Public grievances are also available in PFC web portal under public domain. The link for accessing the same is as under:- https://pfcindia.com/ensite/Home/VS/61 The systems are duly notified and the Nodal Officers ensure quick redressal of grievances within the permissible time frame. PFC has also notified Citizen's Charter to ensure transparency in its work activities. The Charter is available on the website of PFC to facilitate easy access.

Information required to be furnished as per the Companies Act, 2013, Securities and Exchange Board of India (Listing

Obligations and Disclosure Requirements) Regulations,

2015, DPE's Guidelines on Corporate Governance for

CPSEs and other applicable statutory provisions is annexed to this report as follows:

Your Board of Directors acknowledge and place on record their appreciation for the assistance, co-operation and encouragement extended to the Company by the

Government of India particularly the Ministry of Power, Ministry of Finance, Ministry of Corporate Affairs, State Governments, Reserve Bank of India, Department of

Public Enterprises, NITI Aayog, DIPAM, Securities and

Exchange Board of India, National Stock Exchange of

India Limited, Bombay Stock Exchange Limited, Ministry of Micro, Small and Medium Enterprises, and other concerned Government departments/agencies at the Central and State level etc.

The Company is also thankful to the Comptroller & Auditor General of India, the Statutory Auditors, Secretarial Auditor and RBI Auditors and the bankers for their constructive suggestions and co-operation.

Your Directors would also like to convey their gratitude to the shareholders, investors, clients and customers for their unwavering trust and support. Last but not the least the directors would like to thank the employees for their continuing support and contribution in ensuring an excellent all round performance.